TAKE THE CLN POLL: GRADING 2010

It's the last CLN of the year – so what kind of year has it been for you? Was 2010 better or worse than 2009? And was it better or worse than you expected. To vote, click on Industry Polls in the right-hand column, or click HERE.

CLN POLL: THE SEASON, THUS FAR

So far so good, say the voters in CLN's unscientific poll. Regardless of the voters' perspective -- vendor, retailer, designer, etc. -- 38.7% say the season is going better than expected. Only 19.4% are disappointed, and the remainder believes the season is about what they predicted.

THE YEAR IN REVIEW

Michaels made deals with names such as Paula Deen and Build-A-Bear, opened its first inner-city store in Manhattan, and expanded in Canada. Increasing its direct-importing and private-label programs caused a great deal of consternation for many vendors. The quarterly earnings reports were strong, and the refinancing of much of its debt eased the industry's worries about the company servicing its debt.

While the privately-held Hobby Lobby does not release its sales/earnings, every indication is that sales and profits are excellent. Expansion continues, including a first store in California. HL gave raises to all employees -- minimum wage is $11 -- established an employee health-care center in Oklahoma City, launched an effort to erect a national Bible museum, and gave away millions of dollars to schools and charities.

Jo-Ann continued its strong showing, thanks in part to heightened consumer interest in sewing; Wal-Mart's on-again-off-again interest in fabric; and, vendors tell CLN, strong management.

Hancock's reports indicate the company is still finding its way after successfully emerging from bankruptcy, and its test of a craft department is cause for optimism. ... Vendors returned from the fall A.C. Moore vendor conference more optimistic about the company's future, but the latest earning report indicates the turnaround is far from complete. ... Regarding crafts and sewing, 2010 has been the most indecisive year in Wal-Mart history.

Thus far this calendar year, collectively Jo-Ann, Hancock, and A.C. Moore stocks have out-performed the general stock market.

Vendors. It was not a particularly good year. Many wrestled with losing business or lowering prices due to increased private label and direct import programs, coping with the Consumer Product Safety Improvement Act, and dealing with tight-fisted bankers and price increases in raw materials. Congress passed legislation designed to reform health care, credit cards, and the financial system, but most didn't go into effect immediately and left many businesses wondering how these new laws would, exactly, affect them.

Trends. Basic crafts, kids crafts, sewing, and jewelry-making were the categories that seemed to make the most news. ... While scrapbooking remains a major category, it appears to have matured. The number of independent shops has leveled off, but consolidation continues among vendors. ... Courtrooms were busy with industry-related cases: designers suing chains for copyright/trade mark infringement; the SEC charging the Wyly brothers (former Chair and Vice Chair of Michaels); an anti-dumping lawsuit; and employees suing employers. … The size – and attendance -- at most industry trade shows was down, although in many cases they fared better than shows in other industries. ... The chains increased their classes, demos, and make-it/take-its.

Technology. Thanks to iPads and Kindles, e-books and enhanced e-books, and online, interactive magazines, the distinction between a book and a magazine is definitely blurring. ... QR Codes and smart phone apps are changing the way consumers shop. ... Vendors and retailers alike are including Facebook and Twitter as part of their marketing strategies. ... Consumers are still buying project books and magazines, despite the fact that there are thousands (millions?) of free projects on the Internet.

Miscellaneous. The Canadian Craft & Hobby Assn. and the Craft & Hobby Assn. approved a merger. … Delta Creative and Plaid agreed that Plaid would manufacture Delta's acrylic paint, Ceramcoat, ... The National Museum of Decorative Painting moved to new facilities in Atlanta. ... Joe Jeffries was named CEO of A.C. Moore. ... Max Makow announced his retirement.

Acquisitions.  The founding Haskins family sold England's largest craft chain, HobbyCraft, to Bridgepoint Capital, a UK private equity firm. ... ANW/Crestwood, owner of The Paper Company and TPC Studio, acquired the assets of Creativity’s Autumn Leaves, DMD, Westrim, Crop In Style, and Hip In A Hurry brands. ... Janlynn acquired Crafter’s Pride ... Michaels acquired the online scrapbooking application created by ScrapHD … Advantus acquired substantially all of the assets of Sulyn Industries ... Sorenson Capital sold a majority stake in Provo Craft to BAML Capital Partners … Prym Consumer USA purchased the O’Lipfa, Quilt Sense, and Seams So Fast brands from AC Marketech. ... Sandylion was sold to Trends Int., a major publisher and manufacturer of posters, calendars, coloring activity kits. … European distributor Kars acquired KnorrPrandel in Germany. ... Avon agreed to purchase the assets of Silpada Designs. ... Borders sold its English stationery chain, Paperchase to Primary Capital, a private equity firm. ... QuicKutz agreed to sell its assets to Lifestyle Crafts, a Utah-based investor group. ... Bazzill acquired the Prismatics collection of cardstock from Prism Papers. ... Darice acquired Core'dinations. ... Fabric Editions was sold to the owners of NY-based Jaftex Corp., Henry Glass & Co., A.E. Nathan Co., The New Stylemaker, and Merrivale Fabrics.

Friends. Finally, let's raise a glass to those we lost this year: Robin Thompson (The Thompson Group) ... Frances Kuyper, the "Cake Lady" ... Bonnie Leman (Quilter's Newsletter and Quiltmaker magazines) ...  Kim Crews Barnett (Jeannette Crews) ... John Michael Ward  (National Art & Hobby) ...  Peter Hopper (HK Holbein) ... Irwin Bear (P&B Textiles) ... Herb Niemi (Modern Store Fixtures) ... Frank Armstead (Franks's Nursery & Crafts, Craftopia.com) ... Mary Frances Gombkoto (Woolco/Walmart Canada).  And a special toast to the remarkable Mike Dupey.

10 PREDICTIONS FOR THE NEW YEAR

1. Look for Michaels to expand further in Canada and, if the Manhattan store performs well (CLN hears it is, so far), the company will look to other big-city venues.

2. Look for Congress to make changes in the Consumer Product Safety Improvement Act that has caused so many headaches in the past two years. To learn more about what appears to be on the horizon, click HERE. Cap-and-trade legislation and the Employee Free Choice Act, also known as Card Check, will not pass. More states, if not Congress, will pass legislation requiring e-commerce sites to charge and pay sales tax. Efforts will continue to repeal the 1099 provision of the new health care law.

3. Wal-Mart appears to be re-thinking its decision to drop fabric. Michaels may test a cut-fabric program. A key question: what department will Michaels reduce to make room for it?

4. Jo-Ann and Hobby Lobby will increase the number of new store openings and remodels, but as the economy improves, low-rent leases won't be as plentiful. Hancock will roll out its craft department to more stores.

5. Inflation. As the world economy recovers, demand for raw materials will increase, pushing up prices for raw materials -- and Chinese-made products won't be so inexpensive.

6. If Michaels has a strong fourth quarter, Bain Capitol and The Blackstone Group will launch an IPO and sell the company to the stockholders. The timing will depend on the economy and the state of Wall Street.

7. The number of attendees at most trade shows will decline, but that won’t be evidence that our industry is declining -- merely evolving.

8. Independent bead shops will face more of a challenge as the chain stores and craft independents push more aggressively into jewelry-making. The decline in the number of scrapbook stores has stopped.

9. Look for more vendors to explore opportunities in other industries.

10. Watch for publishers to lean more and more to e-books where consumers download a book. It certainly saves on printing and shipping costs, but where does that leave the retailer?

(OK, that's the results of CLN's crystal ball. What about yours? Which categories will rise or fall? How will independents and/or chains fare in 2011? Vendors? Publishers? What design trends will we see in the new year? Email your thoughts – on or off the record – to mike@clnonline.com.)

HOLIDAY SALES CONTINUE STRONG

Consider the latest positive news:

1. The CLN poll (see above), while unscientific, indicates our industry is doing well.

2. The National Retail Federation revised its holiday sales forecast to 3.3%, up from 2.3%.

3. The Commerce Department reported a 0.8% increase in retail sales in November from the previous month, and revised its estimate for October from a 1.2% gain to 1.7%.

4. Import cargo volume at the nation’s major retail container ports, an indication of retailers' current and future plans, is expected to be up 9% in December over the same month last year. The entire year is expected to have a 17% increase over last year, reported the NRF.

A GROWING OPTION TO DIY SCRAPBOOKS

In a lengthy article in the 12/16 issue, the Wall Street Journal gave extensive coverage to four companies that will create scrapbooks for consumers. While the cost seemed high ($7.50 to $50 per page, depending on the company), it offers time-strapped consumers with money an alternative to buying our industry's products and making the scrapbooks themselves.

The article highlighted Generation Scrap (www.generationscrap.com), Seattle Scrapbooking Services (www.seattlescrapbookingservices.com), Captured Time Custom Scrapbooks (www.capturedtimebooks.com) and Catching Keepsakes (www.catchingkeepsakes.com).

Reporter Nancy Matsumoto wrote, "Two of the services created old-fashioned glue-and-paste books using colored card stock and fanciful embellishments to showcase our photos; the other two arrived at these effects digitally, in printed albums or album pages."

Matsumoto concluded, "Our experience taught us that professionals really do know how to scrapbook better than we ever could...."

CHA FORMS YOUNG EXECS COMMITTEE

CHA is looking to bring together young industry execs to form an advisory group to work with the Board of Directors to help shape the future of the industry. The first meeting is Sat., Jan. 29, 6:00-7:73 pm in Room 304 AB, above South Hall in the L.A. convention center. The discussion will center on how to impact the growth of the industry in the next 3, 5, and 10 years.

The effort is spearheaded by three board members, Kim Donahue (Tall Mouse), Rob Bostick (Judikins), and Sara Davies (Crafter's Companion). They are looking for people 40 or under who hold a position of responsibility in a CHA Member company, and have the support from upper management. Space is limited; if you're interested, email to Kim at kim@tallmouse.com.

IS THE CREDIT CRUNCH FINALLY EASING?

Many vendors have complained to CLN about the difficulty in obtaining loans for expansion and/or cash flow. Finally, there might be light at the end of the tunnel. The Small Business Administration announced two new lending programs designed to get loans under $250,000 to small businesses quickly, CNNMoney.com reported. In the new Small Loan Advantage program applications are only two pages long and can be approved in anywhere from "minutes" to 10 days, according to the SBA.

A second initiative, Community Advantage, is designed to get SBA-backed loans to underserved communities, such as minority-, women-, and veteran-owned businesses, and firms in lower-income or rural areas. Applications can be approved in 5-10 days.

Some 630 banks are preferred lenders and have the authority to approve loans independently. The loans are guaranteed at 85% up to $150,000 and 75% over $150,000. Both programs are expected to be functioning by March 15.

(Note: Rachel Zippwald, a VP at California Bank & Trust, offers advice in her article, "7 Tips for Landing an SBA Loan." The article was written before the announcement of the new SBA programs. To read it, click HERE.)

JO-ANN ANNOUNCES CONTEST WINNERS

Almost 50,000 votes were cast in Jo-Ann's Craft for a Cause contest designed to inspire consumers to create and donate craft and sewing projects to various charities.

The contest began in August and the entries were judged by a panel of sewing and craft experts. Five winners were selected, each receiving a $1,500 Jo-Ann gift card. (To see their donations, visit www.joann.com/craftforacause.)

The three charities who had received contributions from the most donors became finalists for the second phase of the contest. Voting for the finalists began in November.

First place ($50,000) was Project Linus, which coordinates and distributes handmade blankets and quilts to children who are seriously ill, traumatized, or otherwise in need. The second place ($25,000) winner was Operation Write Home, which supports America’s armed forces by sending blank, handmade greeting cards that troops can use to write letters home. Cards of encouragement are also sent directly to deployed soldiers. The third place donation of $15,000 will benefit the American Cancer Society.

 LEISURE ARTS EXPANDS

Midpoint Trade Books and Leisure Arts signed an agreement which calls for Leisure Arts to distribute Midpoint titles from the Leisure Arts' warehouse beginning in February. Midpoint represents 275 independent publishers across the U.S., United Kingdom, Canada, and Australia.

"For the many independent publishers who are looking for growth in a challenging economic environment, the strategic alliance between Midpoint and Leisure Arts is an exciting alternative," said Midpoint CEO Eric Kampmann. "This combination brings an impressive depth of management and distribution expertise that will set us above and apart from our competitors in the book industry."

The alliance will also result in a more comprehensive website in February, which will provide publisher clients with a quick, comprehensive means of analyzing detailed sales results.

"Midpoint’s knowledge of the intricacies of the book trade, relationships with key people, and sense of what results in successful books is a skill set that would have taken us years to develop on our own," said Leisure Arts CEO Rick Barton. "Combining Midpoint’s sales and marketing expertise with our distribution platform gives a rare and promising opportunity to other publishers."

NAMTA NEEDS YOUR HELP!

This year Pepsi will award more than $20 million to fund "great ideas that refresh the world" through its Pepsi Refresh Project. The NAMTA Foundation, the non-profit, charitable wing of the Int. Art Materials Trade Assn., is in the running this month to become one of those grant recipients.

The Foundation's idea is to provide grants to teachers to bring art to life in their classrooms. If this project gets enough votes to receive the $250,000 grant from Pepsi, the Foundation will use the money to provide grants to schools to provide teachers with the art supplies and knowledge necessary to teach art to students. Voting runs through the end of December. Anyone can vote once a day via three voting methods. Visit www.refresheverything.com for more info on the Pepsi Refresh Project and www.namta.org/refresh for info on how to help the Foundation with their project.

You can vote three ways everyday -- one vote from each method: 1. Go to http://pep.si/gSbhcR or www.refresheverything.com (Keyword: NAMTA) and sign up for an account on the Pepsi site. You will be asked for your name and email address, and to create your own password. 2. Go to http://pep.si/gSbhcR or www.refresheverything.com (keyword: NAMTA) and choose to sign in with your Facebook account. If you already have a Facebook account, click the button and agree to the terms. 3. Text the number 104735 to Pepsi (73774).

CHA NEEDS YOUR HELP!

CHA will partner with two non-profit kids organizations at the CHA Winter Conference & Trade Show in Los Angeles, LA’s Best and Kids In Need Foundation.

1. CHA will host a kids craft fair for about 200 students at Hoover Elementary School on Mon., Jan. 31, to support LA’s Best, an after-school enrichment program run by the Mayor’s office in conjunction with the L.A. Unified School District."

CHA is looking for member companies to donate 200 plastic headband, ribbon, adhesive, foamie visors, peel-n-stick embellishments, kids-themed and Spanish-language scrapbook paper. For more info, contact media@craftandhobby.org.

2. CHA is working with the Kids in Need Foundation to provide school supplies to at-risk school kids. CHA will collect donated school supplies in drop-boxes located in the lobby of the L.A. convention center, host a silent auction on the show floor at the show, and allow the Kids in Need Foundation personnel to collect any unwanted booth samples from exhibitors following the show. For more info, email tmercardo@craftandhobby.org. (Note: A non-profit used to have a similar arrangement with ACCI at the summer show. At the end of the show, volunteers would collect all of the products the vendors wanted to donate. It was a win-win for exhibitors; they helped a good cause and did not have so much "stuff" to ship home.)

ARE RETAIL STORES BECOMING SHOWROOMS?

The majority of shoppers surveyed recently by Accenture said they would rather use their smartphones than ask a store clerk when checking product availability and seeking other store and product information, Internet Retailer reported. "Ultimately, this trend will lead to a new definition of the store; purpose, place, and size are all up for debate. Already we are seeing some shoppers treating stores more like a showroom to test products and then making their purchase online," Janet Hoffman, managing director of Accenture's retail practice, told Internet Retailer. To read the report, click HERE.

CALL FOR NEW PRODUCTS

Are you exhibiting at next month's TNNA and/or CHA shows? If so, give CLN retailers and distributors a sneak peak by sending A) the show and your booth #; B) a brief description of products that have been unveiled since last summer or will be at the show; and C) the URL of your website. Email the info to mike@clnonline.com.

RANDOM NOTES, RANDOM THOUGHTS

1. Congress finally passed the legislation extending the Bush-era tax cuts. But the bill contains far more provisions affecting small business than simply the tax rates. The Small Business Legislative Council produced a summary of the entire bill distributed by the Toy Industry Assn. To read it, visit HERE.

2. If you're under 40, I strongly recommend you sign up for CHA's new Young Execs committee. I've served on various committees and boards and trust me, it's not time-consuming and you'll get out of it far more than you put into it -- gain a much greater knowledge and understanding of the industry, have the opportunity to have real input to the industry's leaders, and make new friends. It can also be an excellent steppingstone to becoming a member of the board itself.

3. The Associated Press reported that a wide range of popular dolls are sold out -- many of whom sold during the Thanksgiving weekend at regular prices. Years ago when the Cabbage Patch phenomenon hit the country, soon there was a widely publicized shortage and before we knew it, the industry had its next huge trend – dollmaking. The trend eventually faded when Cabbage Patch dolls became plentiful again.

4. DRG has published Mix & Match Quilts With the AccuQuilt GO!® under the House of White Birches brand; it features designs cut with the AccuQuilt GO!® fabric cutter. This sort of cooperation used to be very common: a manufacturer with a new product would make an arrangement with a publisher to produce a how-to book featuring that product or line of products. I don't understand why the practice isn't nearly as common as it used to be. Can someone explain it to me? Email your thoughts to mike@clnonline.com.

MISCELLANEOUS NEWS: RETAIL

LAWSUIT. The Supreme Court agreed to decide whether all the women who claim that Wal-Mart discriminated against them in employment can sue the company as one class-action suit; if the Court agrees with the women, it would be the largest class-action suit in history. The Court would also decide whether the woman can sue for back pay or only for judicial orders to force the company to change its behavior. When the case was originally filed, legal experts estimated the cost to Wal-Mart if it loses could be as high as $1 billion.

CARD FEES. The Federal Reserve proposed cutting the fees retailers pay to banks on debit card transactions by as much as 90%, the Wall Street Journal reported.  This may result in lower prices, but banks may try to make up the difference by charging higher fees for bank accounts and other services, the Journal wrote.

GRINCH. Just in time for Christmas, Wal-Mart announced it will phase out the additional $1/hour it pays to staffers when they work Sunday shifts. The change affects workers hired after Jan. 1, except in RI or MA, where state law requires retailers to pay 1.5 times the hourly rate on Sunday.

TECHNOLOGY. Macy's newest gadget is gaining attention among shoppers at the chain's Manhattan flagship, TMCnet.com reported. The "magic" mirror takes a picture of the shopper, then allows her to virtually try on the store's fashions and send photos of her favorites to friends for comments. So a consumer can virtually try on a pair of jeans in the dressing room, send the photo to a friend in Cleveland and say, "Betty, do these jeans make me look fat?"

TECHNOLOGY. A key to scrapbooking's continued success is consumers printing the photos they take, and technology is making it easier for them to do so. As CLN reported, HP unveiled a new line of printers which enable consumers to take photos with their phones, email them to the printer, and the photos will be printed and ready for scrapping. Now the drugstore chain CVS announced a new app that allows Facebook users to order prints from their Facebook albums without leaving the website, and the prints will be ready for pick-up in about an hour at their local CVS pharmacy.

CHARITY. Hobby Lobby Founder/CEO David Green and his wife, Barbara, and Facebook Founder Mark Zuckerberg are part of the second group of millionaires who have joined Warren Buffet and Bill Gates "Giving Pledge," in which they promise to give more than half of their wealth to charitable causes. Days later, the Green family announced a donation of $10 million to Oral Roberts University for campus renovations and deferred maintenance in 2011, the Tulsa World reported. The family had already given the university $70 million 2007, and since then have donated another $30 million to the school. This latest gift brings the family's total donations to $110 million.

STOCKS. A.C. Moore: $2.40, up $0.30 ... Hancock: $1.03, down $0.21 ... Jo‑Ann: $45.15, down $1.79 ... Wal‑Mart: $54.41, down $0.21 ... Dow Jones: 11,491.91, up 0.1%. (Note: All changes in price are since 12/3 and are exclusive of dividends.)

MISCELLANEOUS NEWS

SHOWS. The CHA Winter Conference & Trade show in Los Angeles next month already has more exhibitor square footage than this year's show, and conference pre-registration is up more than 100%. As CLN reported, more workshops have been added and the capacity of some others has been increased. Visit www.chashow.org.

CARDS. Fewer consumers sent Christmas cards last year, the Chicago Tribune reported, citing experts  who believe Facebook is a major cause. (Comment: Cardmaking is another cause, we hope!)

BANKRUPTCY. Momenta filed for Chapter 11 bankruptcy reorganization due primarily to litigation issues. The company will continue to operate while it goes through the process, and CEO Michael Barker says the company will exhibit at the CHA Winter Conference & Trade Show (booths #2223 and 2332) with the largest new product assortment in the company's history.

E-BOOKS. Kalmbach is now offering 42 beading books in digital form. Visit HERE. ... Interweave just released another six e-books available (drawing, crochet, seed beads, felted items, and stone cutting) for free downloading.

WEB. Rit Dye updated its website at www.ritdye.com. It includes the first Rit Creative Challenge "Upcycling" Contest, plus a Color Community where crafters can post photos and share ideas for creative ways to use Rit Dye. There's also a Color Formula Guide for mixing 500+ colors, a blog, and DIY projects for many mediums: fabric, paper, buttons, wood & wicker.

PAINTING. The Society of Decorative Painters has revamped its website, www.decorativepainters.org, which contains, among other things, the catalog for the annual conference in Wichita May 16-21 and the latest issue of Decorative Painter.

SHOWS. To read some excellent, humorous advice on exhibiting at trade shows, click HERE.

THE CREATIVE NETWORK: JOB OPENINGS